U.K. stocks rose for a third day as China refrained from raising interest rates and merger and acquisition activity buoyed Wellstream Holdings Plc and Yule Catto & Co.
Xstrata Plc and Antofagasta Plc led basic-resource shares higher. Wellstream rallied 5.8 percent as General Electric Co. agreed to buy the company for about 800 million pounds ($1.3 billion). Yule Catto led gains on the FTSE 250 Index as the British supplier of polymers agreed to acquire a latex maker from TowerBrook Capital Partners for 443 million euros ($585 million).
The benchmark FTSE 100 Index rose 47.80, or 0.8 percent, to 5,860.75 at the 4:30 p.m. close in London for its longest winning streak since September. The gauge has rallied 8.3 percent so far this year as corporate profits improved and the Federal Reserve bought bonds to assist the U.S. economy’s recovery, a tactic known as quantitative easing. The FTSE All- Share Index gained 0.7 percent and Ireland’s ISEQ Index climbed 0.5 percent today.
“If QE ends up boosting equity prices, companies may be tempted to use their more richly priced shares to indulge in M&A,” David Shairp, a global strategist at JPMorgan Asset Management in London wrote in a report today. We are “still constructive on risk assets.”
Bank of China
The People’s Bank of China, which last week raised reserve- requirement ratios for banks by half a percentage point, didn’t increase interest rates this weekend, even as consumer prices jumped 5.1 percent in November. As Federal Reserve policy makers meet tomorrow, a U.S. Commerce Department report is likely to show retail sales climbed for a fifth straight month in November.
Xstrata gained 1.4 percent to 1,461.5 pence and Antofagasta rose 3.1 percent to 1,543 pence. Copper, lead, nickel and tin climbed in London.
Wellstream rallied 5.8 percent to 790 pence. General Electric agreed to buy Wellstream for 780 pence a share plus a special dividend of 6 pence a share.
Yule Catto surged 12 percent to 290 pence, its highest closing price since April 2006. The supplier of polymers plans to raise 225 million pounds in a rights offering to fund the acquisition of PolymerLatex.
The purchase, Yule Catto’s largest so far, will expand its offering of polymers for the paint, construction, carpeting and adhesive industries, while generating efficiency savings of about 20 million pounds. Chief Executive Officer Adrian Whitfield expects the deal to help earnings starting in the first year of full ownership.
Regal Petroleum Plc rose 6.2 percent to 25.75 pence. The U.K. explorer that put all its drilling operations on hold pending a strategic review said it received a 24 pence-per-share offer from Energees Management Ltd.
Separately, Heamoor Ltd. confirmed its interest in Regal Petroleum and has been in discussion with the company’s board about making a cash offer as well as alternatively combining Regal assets with those of Geo-Alliance Oil-Gas Public Ltd.
John Wood Group Plc, a U.K. oil and gas services company, rallied 6.7 percent to 521 pence as it agreed to pay $955 million for PSN Ltd. to create the world’s leading brownfield production services provider.
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